Cross-border payments have always been more complicated than they look. On the surface, you send money out, and it shows up on the other side. But in reality, those funds can hop through three banks, convert currencies twice, and get screened against a half-dozen compliance lists before the recipient sees a cent. The speed of those handoffs affects how quickly shipments leave port, how reliable your suppliers think you are, and how much margin gets lost along the way.
Cross-border payments are the infrastructure that decides who can do business across borders, how efficiently global companies can grow, and what kind of access smaller players, such as freelancers, small and medium-sized businesses (SMBs), and migrant workers, actually have to the global economy. Below, you’ll find a practical look at how cross-border payments work, where they still fall short, and what’s coming next.
What’s in this article?
- What are cross-border payments?
- How do cross-border payments work?
- What are the benefits of cross-border payments?
- What are the challenges of cross-border payments?
- What are the future trends in cross-border payments?
What are cross-border payments?
A cross-border payment is any transaction where the payer and recipient are in different countries. That can mean a US company wiring funds to a supplier in Brazil, a freelancer in Poland getting paid by a client in Canada, or a migrant worker in the United Arab Emirates (UAE) sending money to family in the Philippines. The defining feature is that the payment crosses jurisdictions. This often requires currency conversion and coordination between multiple financial institutions.
Cross-border payments fall into a few broad categories:
- B2B: Companies paying foreign suppliers, subsidiaries, or contractors.
- C2B: Consumers paying foreign businesses (think online shopping, tuition, or travel purchases).
- C2C: Person-to-person transfers, most commonly remittances to people in developing economies.
The global cross-border payments market totalled $194.6 trillion in 2024 and is projected to reach $320 trillion by 2032. Wholesale payments account for the majority of transactions, with non-wholesale cross-border payments totaling $39.9 trillion. Without reliable channels to move money across borders, international trade, investment, and everyday financial life as we know it wouldn’t be possible.
How do cross-border payments work?
A cross-border payment is a transfer that has to jump between at least two different financial systems. That’s what makes it slower, more expensive, and more complex than a domestic payment.
A common route for cross-border payments is an international wire transfer through the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network. SWIFT is a messaging system used by more than 11,500 institutions to instruct each other where funds should go. If your US bank doesn’t have a direct relationship with a bank in Brazil, it relies on correspondent banks to pass the payment along.
Regional systems can be faster. The Single Euro Payments Area (SEPA) network makes cross-border euro payments feel domestic inside the EU, and Singapore and Thailand have linked their domestic instant-payment networks. These work because the countries involved have harmonized rules and technology, but they only cover specific corridors.
Card networks such as Visa and Mastercard act as another set of intermediaries. When a customer in Mexico pays an ecommerce seller in Canada, the card network facilitates the movement of funds between the buyer’s bank and the business’s bank. Fees and foreign exchange (FX) spreads are embedded in the transaction, and it feels instantaneous for consumers.
Banks hold the accounts, facilitate the foreign exchange, and maintain correspondent relationships that make settlement possible. If two banks don’t have a direct link, intermediaries bridge the gap. Every cross-border transfer also passes through a compliance gauntlet.
Banks and payment providers are legally required to:
- Conduct Know Your Customer (KYC) and Anti-Money Laundering (AML) checks: This involves verifying identities and monitoring for suspicious activity.
- Screen for sanctions: A transfer can be stopped entirely if any party in the chain appears (or might be a match) on a restricted list.
- Respect currency controls: Some governments cap how much money can leave the country or require paperwork (invoices, contracts) before approving outbound flows.
A single transfer can touch multiple institutions before reaching the destination. Each intermediary adds time and cost and has to run its own checks, which is why international wire transfers can take up to five business days, require extra documentation, and arrive short of the amount sent. The compliance burden also explains why some global banks have pulled back from higher-risk corridors.
Fintech platforms are building alternatives, which often have more transparency on cost and timing, especially for individuals, freelancers, and SMBs. For example, Wise avoids correspondent chains entirely by holding accounts in each country and paying out locally. Other innovations expand reach where banking penetration is low. Mobile money services such as M-Pesa let remittances land directly into a digital wallet. And stablecoins such as USDC can move value globally in minutes, 24/7, at very low cost.
What are the benefits of cross-border payments?
International commerce depends on the ability to settle across borders. A German exporter can ship goods to India knowing the payment will land in euros. A US software company can expand into Latin America because it can collect recurring fees in US dollars. Whether it’s a container of steel or a subscription renewal, the entire exchange only works if the payment reliably clears.
While cross-border payments have long had a reputation for being slow and expensive, that’s starting to change. Digital-first providers have cut out some of the intermediaries that slowed wire transfers and drove up costs, and same-day settlement is becoming more common. Cross-border capabilities used to be reserved for multinationals with dedicated treasury teams, but now, small businesses, freelancers, and individuals can all participate. A boutique in Canada can pay artisans in Thailand. A designer in Poland can invoice clients in the US. Migrant workers can send remittances straight into digital wallets with mobile money services such as M-Pesa. Access to international payments has gone from exclusive to everyday.
What are the challenges of cross-border payments?
Cross-border payments are improving, but the pain points are still real. Costs, delays, volatility, and regulatory red tape mean cross-border payments are still more complicated than they should be.
Below are the major hurdles associated with cross-border payments.
Built-in costs
International transfers remain pricier than domestic ones, even with fintech entrants. Global remittances averaged over 6% in fees in 2025, with the average in Sub-Saharan Africa reaching 8.78%. Large B2B wire transfers carry their own drag: multiple banks take cuts as funds move along the chain, and exchange rates often hide additional spreads. Fees eat into the purpose of the payment itself, especially for low-value transfers.
Limited visibility
Unlike a parcel delivery with a tracking number, international transfers often disappear into a black box. You might send $10,000 to a supplier and not know when it will arrive, or how much will be shaved off in intermediary fees, until the payment clears. Some progress is being made with tracking tools such as SWIFT GPI, but opacity is still a common frustration.
Currency swings
When payments cross borders, they typically involve currency conversion. That exposes senders and receivers to exchange-rate volatility. A US company invoicing in euros might see its margin evaporate if the dollar strengthens before payment arrives. Individuals sending remittances experience the same issue month to month. Large firms can hedge with forwards and options; smaller businesses often just absorb the hit.
Regulatory environment
Every international payment is screened for AML, sanctions, and fraud. Each bank in the chain might re-run the same checks, which stretches out settlement times. Some countries also impose currency controls or demand supporting documents for outbound payments, which can stop transfers in their tracks. Compliance costs are a major reason fees remain high.
What are the future trends in cross-border payments?
Cross-border payments are in the middle of a transformation. Two forces stand out: new technology and upgrades to the global plumbing.
Technology is reshaping the networks
Fintechs are no longer on the margins. Stablecoins such as USDC are already being used to move funds across borders, compressing what used to take days into minutes. Stripe’s acquisition of Bridge in 2025 showed that even mainstream processors see value in crypto-backed speed. Application programming interfaces (APIs) and smarter routing are also raising the bar: payments can be steered dynamically toward the fastest, cheapest corridor, with AI flagging issues before they stall.
Platforms such as Bridge’s Cross Border Payments simplify cross-border stablecoin transactions, allowing businesses to move money to hard-to-reach markets with little effort. The blockchain networks stablecoins run on keep transfer fees low and can send funds internationally 24/7.
Global systems are catching up
It’s not just startups pushing change. SWIFT is shifting to ISO 20022, which lets banks exchange richer data and cut down on errors. Domestic payment systems are being linked across borders (SEPA in Europe, for example), which makes international transfers in those corridors feel almost local. Central banks are also testing shared platforms and digital currencies to settle trades more directly.
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Bridge does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.
Request demo
